THE FINANCIAL AND ECONOMIC CRISIS: DEVELOPMENT AND WAYS TO OVERCOME IT IN TRANSITION ECONOMIES

Amalia SARIBEKIAN


Amalia Saribekian, Ph.D. (Econ.), Member of the Board of the Central Bank of Armenia (Erevan, Armenia)


Introduction

For transition economies, as for the entire global economic system, the current economic crisis is not only creating problems and threatening economic growth, it is also opening up a window of opportunity. The extent to which these countries will be able to take advantage of the new opportunities depends on how deeply and adequately they understand the nature of the crisis, its specifics in their particular country, and the changes to be made based on the lessons learned.

Pre-Crisis Situation

Prior to the current crisis, almost every transition economy, including the post-Soviet, was experiencing a period of economic growth, although its rates varied. The rates and nature of this growth largely depended on the extent to which the particular country, while reducing new risks, was able to take advantage of the additional opportunities that emerged during globalization. This growth was expressed in particular in an annual increase in GDP (see Table 1).

But the increase in GDP reflects in full only quantitative economic growth and not the dynamics of the countrys socioeconomic development as a whole. And the nature of this development has undergone significant changes in the era of globalization and information technology. In the future, development will be defined by such criteria as urban population density, the state of the external and internal environment, the level of culture, and so on. And it is impossible for all of these factors to be taken into account and expressed in the GDP index.

During the transition to the market, an abrupt economic slump and decrease in consumer supply and demand caused the economic potential of transition economies to plummet. Correspondingly, the main task was to restore the former economic level, and economic growth was mainly of a quantitative nature (although significant qualitative changes were also seen).

The situation created was aggravated even more by the world economic crisis. Today, it is very important to correctly assess the opportunities of the new economy, study the current situation comprehensively and more objectively, and determine ways to withdraw from the crisis and


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